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FCC Repeals TV/Cable Cross Ownership Rule

02.27.03

The FCC has repealed the rule that prohibits common ownership of a cable system and full power TV station in the same market. This action carries out the mandate of the U.S. Court of Appeals for the D.C. Circuit, which vacated this rule in February 2002. The Commission is still considering numerous other media ownership rules, including the following: cable TV horizontal and vertical ownership rules; broadcast/newspaper cross-ownership rule; local radio ownership rule; TV/radio cross-ownership rule; dual broadcast network rule; local TV ownership rule; and national TV ownership rule.

The D.C. Circuit has found several of the existing media ownership rules to be “arbitrary and capricious,” remanding them back to the FCC for review. For example, two years ago the court overturned the Commission’s limits on horizontal and vertical cable ownership, which imposed a 30% limit on the number of multichannel video subscribers that may be served by any one cable operator (“horizontal” ownership), as well as a separate 40% limit on the number of channels that a cable system can devote to programming supplied by affiliated entities (“vertical” ownership). Last year, the same court remanded the national TV ownership rule back to the FCC, finding that the Commission had failed to justify its 35% cap on audience reach. Similarly, the court found that the FCC had failed to justify the local TV ownership rule allowing ownership of two stations in the same market, so long as at least one of those two stations is not among the four highest ranked stations in the market, and so long as eight independently owned full power TV stations remain in the market following the acquisition.

It is expected that the FCC will increase the caps applicable to horizontal cable ownership and national TV ownership and that the newspaper/broadcast rule (prohibiting common ownership of a daily newspaper and broadcast station in the same market) will be repealed. It is impossible to predict the precise nature or timing of the new rules, although FCC Chairman Michael Powell has stated his intention to act on these matters sooner rather than later.

Please contact us if you have any questions concerning the Commission’s multiple ownership rules or any related matters.

Disclaimer

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.